SPX Flow (FLOW) to Sell Substantial Portion of P&E Business to Apollo (APO) at $475M Enterprise Value

SPX FLOW, Inc. (NYSE: FLOW) announced that it has entered into a definitive agreement to sell a substantial portion of its former Power and Energy reportable segment ("the P&E business") to an affiliate of funds managed by Apollo Global Management, Inc. (NYSE: APO).

Under the terms of the purchase agreement, the Apollo fund affiliate will purchase the P&E business in an all-cash transaction with an enterprise value of $475 million, which is subject to adjustments based upon the level of net working capital, cash and debt of the P&E business at the closing date and in respect of certain debt-like items. The transaction is expected to close in the first half of 2020 subject to customary regulatory approvals and closing conditions and includes a formal offer to acquire the French business which may be accepted following Works Council consultation.

Upon completion of the transaction, the company intends to prioritize the allocation of net proceeds on debt reduction and return to shareholders.

Marc Michael, President and CEO of SPX FLOW, said, "Today's announcement follows a thorough divestiture process and represents a significant milestone in our strategic transformation as we focus on unlocking the underlying value of our enterprise and growing our premier process solutions business. After completing the sale of the P&E business, our company will be concentrated on serving customers in highly regulated sanitary and specialty industrial markets. Furthermore, this transaction will bolster our financial position, creating ample flexibility to broaden our capital allocation, and enable us to invest in our business throughout economic cycles."

"We are building a premier process solutions enterprise from a strong foundation that includes world-class process engineering expertise, global capabilities and well-recognized product brands with leading market positions. We have tailored the design of our organization to support serving customers in highly complex process applications with an emphasis on driving a winning culture, enabling cross-functional teamwork and building core capabilities around customer intimacy, velocity and vitality. We are on track to achieve our financial goals of mid-teen EBITDA margins and double-digit ROIC by 2021. And we are developing detailed roadmaps to disproportionately invest for growth in select micro-verticals where customers value our process technologies, high-quality components and ability to provide service throughout the lifecycle.

"We are excited about our future and are focused on cultivating a people-first culture that delivers a world-class employee experience and a differentiated customer experience while also delivering on our commitment to create value for shareholders. I want to thank our teams across the enterprise, as well as our advisors and business partners, for their hard work and positive contributions to today's announcement and our progress this year," concluded Michael.

José Larios, who will lead Power and Energy as Chief Executive Officer said, "This is a very positive outcome for our Power and Energy team and we are excited for the future. Apollo is a marquee firm with significant resources, deep expertise in natural resources and a strong vision to invest for growth in our business. Our customers will benefit from that investment and focus on our leading brands of mission critical flow control equipment and services. I want to thank our Power and Energy team for steadfastly supporting our customers throughout this process and for delivering a strong performance this year. I appreciate their continued efforts and dedication as we work towards completion."

Christine Hommes of Apollo Private Equity said, "We are excited for Apollo's funds to make this strategic investment in SPX FLOW's P&E business and look forward to working with José Larios and the outstanding team to invest and grow the business. We believe it is an excellent fit with our funds' natural resources portfolios and see tremendous value creation opportunities, building off the 100-plus year legacy the P&E business brands have established serving customers throughout the world in the flow control and energy markets with leading technologies and strong aftermarket support."

BNP Paribas is serving as financial advisor to SPX FLOW and Fried, Frank, Harris, Shriver & Jacobson LLP is serving as legal counsel. Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as Apollo's legal counsel and Goldman Sachs, Mizuho and Natixis are serving as Apollo's financial advisors.

You May Also Be Interested In

• IBM tumbles on soft Q1 revenue; announces HashiCorp $6.4bn acquisition
• NVIDIA (NVDA) has agreed to acquire Run:ai
• InVitae (NVTA) Enters into Agreement with Labcorp (LH) for Sale of Business